Apple breaks with digital music competitors, will not appeal songwriter royalty increase

Major digital music and streaming services Amazon, Google, Pandora and Spotify on Thursday filed separate appeals of a U.S. Copyright Royalty Board ruling that greatly increases royalty rates paid out to songwriters. Apple is conspicuously absent from the list of appellants.

The filings, lodged with the U.S. Court of Appeals for the District of Columbia Circuit, represent a unified effort to disrupt the CRB's 2018 decision to grant writers a 44 percent bump in mechanical royalty rates, reports Variety.

Google, Pandora and Spotify laid out their collective grievance in a joint statement:

"The Copyright Royalty Board (CRB), in a split decision, recently issued the U.S. mechanical statutory rates in a manner that raises serious procedural and substantive concerns. If left to stand, the CRB's decision harms both music licensees and copyright owners. Accordingly, we are asking the U.S. Court of Appeals for the D.C. Circuit to review the decision."

Amazon is thought to be appealing the CRB ruling for similar reasons. That the online retail giant also filed its appeal on the same day as Google, Pandora and Spotify suggests it is associated with, or was aware of, the collective effort to fight royalty increases.

Apple Music did not appeal the CRB ruling, and Variety sources say the company does not intend to do so in the future. The move was lauded by songwriter organizations, including the National Music Publishers' Association, which is expected to file its own notice of appeal.

"We thank Apple Music for accepting the CRB decision and continuing to be a friend to songwriters," said David Israelite, president and CEO of the NMPA. "While Spotify and Amazon surely hope this will play out in a quiet appellate courtroom, every songwriter and every fan of music should stand up and take notice. We will fight with every available resource to protect the CRB's decision."

In simple terms, mechanical royalties are reimbursements paid to license holders when a song is reproduced and distributed, whether it be a physical pressing, digital sale or stream. The advent and proliferation of streaming services has complicated the reimbursement structure, while the lack of an adequate accountability apparatus further dilutes already low per-play rates for artists.

Actions by the CRB, as well as the Music Modernization Act, seek to bring aging copyright legislation up to speed in a bid to better cope with a fast-moving digital music industry.

Apple, which bills itself as a friend of musicians and songwriters, has in the past attempted to address artist complaints. In 2016, roughly a year after Apple Music launched, the company issued a proposal to the CRB calling for a flat royalty rate on streaming content.

In the short term, this will hurt Apple’s Services revenue, and users may need to expect a modest price increase across all the music-streaming services to cover the increased costs of the material that forms the core of these services. I think we’re looking at $12 a month rather than the present $10/month level, but I don’t think this will happen for another couple of years.

In the medium-term, artists telling their fans to use Apple Music rather than the others because of their opposition to actually paying songwriters fairly will prove to have been a big mistake by Apple’s streaming rivals. Long term, once this is settled equilibrium will set in and the services will be roughly equal again.

These things are rarely as simple as "Apple support songwriters! Yay!"...

One cynical view of this is that Apple doesn't really care if it loses money (or even more money) on Apple Music right now... it can afford it while its competitors (especially Spotify!) can't.

Spotify just _barely_ started making a profit... if the royalties go up... the Spotify will have to raise prices. Apple, however, doesn't need to raise prices because it can afford to take a loss on Music and make money on everything else (iPhones, etc.).

If Spotify has to raise prices and Apple Music doesn't... we could see a huge shift in people leaving Spotify for Apple Music... which will further damage Spotify.

Imagine for a moment that Spotify doesn't exist (which could eventually happen): Apple will be pretty much free to set their price...

Yes, yes... Google and Amazon still exist at that point (they can afford it too)... but with much inferior products and a much smaller userbase they hardly matter.

Anyway: my point is... Don't always ascribe altruism to a company's actions. There are _many_ reasons why a company does what it does... and most of the time it has to do with profit (either now or in the future).

These things are rarely as simple as "Apple support songwriters! Yay!"...

One cynical view of this is that Apple doesn't really care if it loses money (or even more money) on Apple Music right now... it can afford it while its competitors (especially Spotify!) can't.

Spotify just _barely_ started making a profit... if the royalties go up... the Spotify will have to raise prices. Apple, however, doesn't need to raise prices because it can afford to take a loss on Music and make money on everything else (iPhones, etc.).

If Spotify has to raise prices and Apple Music doesn't... we could see a huge shift in people leaving Spotify for Apple Music... which will further damage Spotify.

Imagine for a moment that Spotify doesn't exist (which could eventually happen): Apple will be pretty much free to set their price...

Yes, yes... Google and Amazon still exist at that point (they can afford it too)... but with much inferior products and a much smaller userbase they hardly matter.

Anyway: my point is... Don't always ascribe altruism to a company's actions. There are _many_ reasons why a company does what it does... and most of the time it has to do with profit (either now or in the future).

You do make a good point IMO. Apple can afford to just go with the flow knowing it can afford to take a loss on Apple Music because it has other hardware, software and services to make up for it whereas their biggest competitor Spotify has nothing to recoup its losses other than more subscribers which it may find harder to get if it has to increase its prices because of the royalty fee increase. This is Apple actually playing hardball with its competitors which yes, in the end benefits the artists as well.

These things are rarely as simple as "Apple support songwriters! Yay!"...

One cynical view of this is that Apple doesn't really care if it loses money (or even more money) on Apple Music right now... it can afford it while its competitors (especially Spotify!) can't.

Spotify just _barely_ started making a profit... if the royalties go up... the Spotify will have to raise prices. Apple, however, doesn't need to raise prices because it can afford to take a loss on Music and make money on everything else (iPhones, etc.).

If Spotify has to raise prices and Apple Music doesn't... we could see a huge shift in people leaving Spotify for Apple Music... which will further damage Spotify.

Imagine for a moment that Spotify doesn't exist (which could eventually happen): Apple will be pretty much free to set their price...

Yes, yes... Google and Amazon still exist at that point (they can afford it too)... but with much inferior products and a much smaller userbase they hardly matter.

Anyway: my point is... Don't always ascribe altruism to a company's actions. There are _many_ reasons why a company does what it does... and most of the time it has to do with profit (either now or in the future).

Good points, but I feel like if that was Apple’s intention they could just lower their prices now to achieve the same goal (if the goal is to damage Spotify).

These things are rarely as simple as "Apple support songwriters! Yay!"...

One cynical view of this is that Apple doesn't really care if it loses money (or even more money) on Apple Music right now... it can afford it while its competitors (especially Spotify!) can't.

Spotify just _barely_ started making a profit... if the royalties go up... the Spotify will have to raise prices. Apple, however, doesn't need to raise prices because it can afford to take a loss on Music and make money on everything else (iPhones, etc.).

If Spotify has to raise prices and Apple Music doesn't... we could see a huge shift in people leaving Spotify for Apple Music... which will further damage Spotify.

Imagine for a moment that Spotify doesn't exist (which could eventually happen): Apple will be pretty much free to set their price...

Yes, yes... Google and Amazon still exist at that point (they can afford it too)... but with much inferior products and a much smaller userbase they hardly matter.

Anyway: my point is... Don't always ascribe altruism to a company's actions. There are _many_ reasons why a company does what it does... and most of the time it has to do with profit (either now or in the future).

The biggest problem with Spotify is their free tier that is unprofitable for everyone involved.

These things are rarely as simple as "Apple support songwriters! Yay!"...

One cynical view of this is that Apple doesn't really care if it loses money (or even more money) on Apple Music right now... it can afford it while its competitors (especially Spotify!) can't.

Spotify just _barely_ started making a profit... if the royalties go up... the Spotify will have to raise prices. Apple, however, doesn't need to raise prices because it can afford to take a loss on Music and make money on everything else (iPhones, etc.).

If Spotify has to raise prices and Apple Music doesn't... we could see a huge shift in people leaving Spotify for Apple Music... which will further damage Spotify.

Imagine for a moment that Spotify doesn't exist (which could eventually happen): Apple will be pretty much free to set their price...

Yes, yes... Google and Amazon still exist at that point (they can afford it too)... but with much inferior products and a much smaller userbase they hardly matter.

Anyway: my point is... Don't always ascribe altruism to a company's actions. There are _many_ reasons why a company does what it does... and most of the time it has to do with profit (either now or in the future).

Good points, but I feel like if that was Apple’s intention they could just lower their prices now to achieve the same goal (if the goal is to damage Spotify).

Honestly - I'm surprised they don't do it now. I think they're honestly ok with slowly growing their userbase while they work out the kinks... and they'll come on more aggressively in the near future.

These things are rarely as simple as "Apple support songwriters! Yay!"...

One cynical view of this is that Apple doesn't really care if it loses money (or even more money) on Apple Music right now... it can afford it while its competitors (especially Spotify!) can't.

Spotify just _barely_ started making a profit... if the royalties go up... the Spotify will have to raise prices. Apple, however, doesn't need to raise prices because it can afford to take a loss on Music and make money on everything else (iPhones, etc.).

If Spotify has to raise prices and Apple Music doesn't... we could see a huge shift in people leaving Spotify for Apple Music... which will further damage Spotify.

Imagine for a moment that Spotify doesn't exist (which could eventually happen): Apple will be pretty much free to set their price...

Yes, yes... Google and Amazon still exist at that point (they can afford it too)... but with much inferior products and a much smaller userbase they hardly matter.

Anyway: my point is... Don't always ascribe altruism to a company's actions. There are _many_ reasons why a company does what it does... and most of the time it has to do with profit (either now or in the future).

Well it's true, there is seldom anything altruistic in business.

The problem is Spotify expecting the artists to take a hit so that it can make a profit.

If it cannot make a profit, it should quit. It can't say "I'll distribute your content and make money, but you, as the creator of the content shouldn't expect much."

How is Apple a greedy company when they want to pay to artist more, while others want to pay less?

They could always have "paid the artists more" anytime they wanted to, that's what Tidal originally intended, altho this is NOT what the new Copyright Board ruling addresses anyway. This is for the songWRITERS and not the performing artist, tho on occasion they may be one and the same.

...and yes Apple will garner some good PR with the performers by not opposing this increase for the writers. Smart to let others complain, there's plenty of others to deal with the business/legal stuff, keep Apple out if it.

Anyway: my point is... Don't always ascribe altruism to a company's actions. There are _many_ reasons why a company does what it does... and most of the time it has to do with profit (either now or in the future).

Good points, but I feel like if that was Apple’s intention they could just lower their prices now to achieve the same goal (if the goal is to damage Spotify).

And be accused of "unfair business practices" by FTC and others, the way Amazon was when they started lowering prices to beat the competition? This way is easier and less prone to such accusations.